Governance in SHI

1. Social Health Insurance Implementation Function
Governance
Najibullah Safi, WHO – Afghanistan
Health Care Financing Training, 27th Nov 2014

2. Outline of the presentation
• Definition of governance
• Governance function in Social Health Insurance
• Example of other countries
• Key messages

3. What is governance?
• Governance is the exercise of political, economic and administrative
authority to manage a nation's affairs
• It is the complex mechanisms, processes and institutions through
which citizens and groups articulate their interests, exercise their legal
rights and obligations, and mediate their differences
• Structural setup of decision-making processes and the exercise of
political, economic and administrative authority (UNDP in Siddiqui et al. 2012)

4. What is governance? World Bank Definition
• The traditions and institutions by which authority in a country is
exercised” – Kaufman et al
The way “ … power is exercised through a country’s economic,
political, and social institutions.”

5. Principles of SHI Governance
• Transparency and Rule of Law:
• Regulatory rules clear, known to stakeholders and limited discretionary actions
• Consistency:
• Predictability of regulation and actions (regulations enforced across time, no
change with change of government)
• Accountability and responsiveness:
• Holding decisions makers accountable and controlling corruption
• Inclusiveness, participation and consensus oriented:
• Rules and regulations generated openly, with participation of stakeholders,
generating consensus. Appropriate appeals protecting the rights of all
stakeholders
• Efficiency and effectiveness:
• Governance arrangements enforceable (effective) at a reasonable cost (not
impose a heavy burden on the regulated)

6. Governance Indicators
• Stewardship: who, how and through which regulation are defined:
• Coverage
• Benefit package
• Consumer protection: risk selection, renewability clauses, transferability of
rights, complaints and sanctions
• Financing: contribution rate, co-payments, subsidies
• Provision: provider selection, provider payment mechanism, provider
accreditation and registration
• Prudential: entry requirements, exit mechanisms, sanctions and appeals,
external and internal audit requirements
• Oversight: who is responsible and what is the capacity for enforcement
• Institutional arrangements for:
• Oversight body, Board of Directors, CEO/President/Director General, Auditing

7. Planning Issues
• Covered population/eligibility
• Enrollment/premium collection
• Benefit package: depth of coverage. One or several tiers (voluntary
supplementary?
• Costing/financing (contribution, subsidies, co-payments)
• Macro organization
- Public, Semi-public, Private non-profit, for-profit
- Monopoly or competition (single or multiple funds)
- Separate risk pooling for different population groups?
• Provision: Direct? Contracted from providers public/private/both?
• Payment/contracting systems
• Governance arrangements

8. Experience of other Countries

9. Governance in Health Insurance - Legal Basis
Germany Indonesia Bangladesh
• Since 1883 (Bismarck
and even before)
• 1914: Imperial Insurance
Code covering pension,
health and accident
insurance
• 1951: Law on Self-
Governance
• 1989: Social Code Book 5
on SHI
• 1960’s: Government
established civil servant,
Employees, Military
Health Insurance
Schemes
• 2004: National Social
Security Law enacted
• 2011: Establishment of
National Social Health
Insurance Agency (BPJS –
Kesehatan)
• Only for commercial HI
• No law for SHI (first
draft)

10. Governance in Health Insurance – Role of the Government
Germany Indonesia Bangladesh
Regulator
• Sets legal frame
• Not a member of SHI agencies
• Sets upper limits for
contribution rates
• Risk equalization
• Performance and continued
development of HI system
• Mediator between
stakeholders
Regulator
• Sets legal frame
• Part of supervisory body
• Sets upper limits for
contribution rates
• Sets prices for capitation
(PHC) and DRG (hospitals)
• Financier (pro poor scheme)
• Risk equalization
• Mediator between
stakeholders
Government wants to be all
(ultimately):
• Regulator HI
• Health service provider
• Main health insurance
provider
In pilots (there is not yet
government institution)

11. Governance in Health Insurance – Level of Autonomy
Germany Indonesia Bangladesh
Self-Governance: No direct
Government involvement
• Guaranteed by law
• Collective negotiation and
contracting by payor and
provider umbrella
associations
• Financial supervision by
Federal Institute for
Statutory Health Insurance
• SHI Agency (based on Law
24/2011)
• Not-for-profit parastatal
institution
• Concept as a parastatal
institution

12. Governance in Health Insurance – Regulatory Framework
Germany Indonesia Bangladesh
• Federal Joint Committee as the
highest board in the hierarchy
of self-governing structures
establishes guidelines for the
SHI and assures quality in
health care
• Decisions are made on
including new treatments and
procedures in the SHI benefit
catalogue
• These form the legal basis for
all health insurance companies
and medical providers
• MoH develops regulations,
especially related to providers,
setting the hospital payment
rate and capitation rate,
benefit, etc.
• MoF to approve the
procurement of assets,
approval to the government
contribution for the poor,
financial accountability
• To be developed

13. Governance in Health Insurance – Composition of Supervisory
Board
Germany Indonesia Bangladesh
Composition of the Federal Joint
Committee:
13 voting members:
• Chairperson and 2 impartial
members
• Central association of SHI
• German Hospital Federation
• National Association of
Statutory Health Insurance
Physicians
• German Federal Association of
Statutory Insurance Dentists
• Max. 5 patient representatives
By law it (BPJS) consists of 7
professionals:
• 2 from the government,
• 2 from employers,
• 2 from employees, and
• 1 from community
leader/representative.
• The supervisory board answers
to the President and also
reports to the Council of
National Social Security (DJSN)

14. Governance in Health Insurance – Financial Structure
Germany Indonesia Bangladesh
• SHI: contribution based –
compulsory
• PHI: premium based -
voluntary
• MoH develops regulations,
especially related to
providers, setting the
hospital payment rate and
capitation rate, benefit, etc.
• MoF to approve the
procurement of assets,
approval to the government
contribution for the poor,
financial accountability
To be developed

15. Governance in Health Insurance – Organizational Set-up
Germany Indonesia Bangladesh
Many different schemes (109),
• targeting different groups,
• different modes
• different market shares
(competition)
Monopolistic: BPJS provides the
basic health benefit for every
member.
• Membership is compulsory
• Target 100% coverage by
2019
• Other health insurance can
provide ‘on-top-benefit’
although the current BPJS
schemes is relatively
generous
SHI: N/A
Idea to establish as National
Health Fund

16. Governance in Health Insurance – Freedom of Choice
Germany Indonesia Bangladesh
• Choose provider
• Funds have to accept everyone
(few exceptions)
• Conceptually member can
choose primary care provider
• However currently the most
available primary providers are
government health centers
• Private primary providers are
reluctant due to low capitation
rate – potentially it will grow in
the future as more experience
occurs and payment rates
improve
• Referral system will be enforced
Pilot schemes:
• Only Public Providers (pro poor
scheme)
• Micro health insurance
schemes: predominantly NGO
services

17. Key Messages
• Countries choose their own arrangements and the speed they want to
develop SHI
• There is a value to have a clear separation between purchaser and
providers
• Having multiple providers encourage competition and improve quality
• Historically, most countries start with several schemes. This depends on
the political situation in a country
• No system evolved in one day
• Every system took several steps to develop and improve over time - and it
will continue to be changed and adapt to new challenges

18. Acknowledgement
• Dr. Awad Mataria, Health Economist, EMRO
• Abdi Momin Ahmed, RA Policy and Health planning
• Armin Fidler, Health Sector Manager, Pablo Gottret, Lead Economist,
The World Bank
• Dr. Paul Rueckert, GIZ